Sterling Rallies Ahead Of BoE Minutes
20 March, 2014
Yesterday we saw the pound benefit from more positive sentiment ahead of the unemployment figures and BoE minutes as well as the government Budget Report. The rally started early as European markets opened for trade, with the pound gaining half a cent against the euro. The gains came before any data was released though and stayed fairly range-bound throughout the rest of the day against all the major currencies pairs. For anyone looking to send money to Spain for example, the early gain made around £700 difference on buying €200,000.
The unemployment figures came out pretty much as expected with only the claimant count (the number of people claiming job seekers allowance) dropping more than forecast by some 10,000. The BoE minutes threw up no surprises with a unanimous vote for keeping everything as it was with regards to interest rates and asset purchasing.
The budget report, which rarely has an effect on the currency markets lived up to expectations. The pound was not affected at all despite George Osborne stating growth forecasts were up, borrowing coming down and announcing various policies to help stimulate the economy. It seems traders were unmoved by the 1p cut in beer duty!
In early evening we had the first interest rate setting meeting and press conference from new Fed chair Janet Yellen. Initially when the vote was released, deciding for the third month in a row to taper QE by another $10 Billion the dollar strengthened across the board making half cent gains against sterling and the euro. In the subsequent press conference half an hour later they commented on a change to forward guidance with regards to their ultra low interest rates which has been re-assessed and other factors would need to be considered as well as just the target unemployment rate of 6.5%. This stance gave the dollar further momentum and we saw further gains from the greenback.
Overnight in New Zealand they released GDP figures which was expected to show a fall in economic growth from 3.5% to 3% Year on Year. The figure actually came in at 3.1%, beating predictions but not by enough to make much of an impact within the markets.
So as we start Thursdays trade we have little to go off for the UK or EU with only the CBI Trend Survey released at 11am to affect sterling. In Switzerland they hold their interest rate setting meeting while across the pond we have a flurry of releases to contend with. Unemployment figures and new home sales could cause some fluctuations for the greenback culminating in the key bank stress test info at 8.30pm. So with little to go on from our side, sentiment is likely to rule the roost. Keep in touch with your CI broker to make the best of the rate for your upcoming currency transfer.
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